Democratic senators ask Treasury to report on work on crypto sanctions

Four members of the Senate Banking Committee are asking what the Treasury Department is doing about crypto in the context of sanctions policy. 

In a March 2 letter to Treasury Secretary Janet Yellen, Elizabeth Warren (D-MA), Mark Warner (D-VA), Jack Reed (D-RI) and Committee Chair Sherrod Brown (D-OH) call for responses as to the Office of Foreign Asset Control’s (OFAC) work on cryptocurrencies. 

“There are growing concerns that Russia may use cryptocurrencies to circumvent the broad new sanctions it faces from the Biden administration and foreign governments in response to its invasion of Ukraine,” the letter reads, citing a New York Times report that Warren tweeted out two days earlier. 

The letter particularly highlighted decentralized finance as an area of concern, asking “How has the growth of DeFi arrangements and services affected malign actors’ ability to circumvent sanctions, as well as OFAC’s ability to enforce sanctions?”

Ultimately, the senators ask if OFAC needs new legal authorities or resources. 

Following Russia’s invasion of Ukraine, the US and allies have imposed crippling sanctions on Russia, largely cutting the country out of the financial system. A number of reports have speculated on crypto’s potential utility to get around those sanctions, but data remains limited.

The same questions came up in Federal Reserve Chair Jerome Powell’s testimony before the House Financial Services Committee earlier today, suggesting a political push for new authorities over cryptocurrencies and sanctions.